Sabana Reit sheds new light on ID's dealings with ESR group

Singapore

SABANA Reit offered new information last Sunday about its independent director Ng Shin Ein's dealings with ESR group in 2018 and 2019.

These have been a sticking point for activist funds Quarz Capital and Black Crane, which are opposed to a merger between Sabana and ESR-Reit.

Sabana said Ms Ng had owned 40 per cent of Blackwood Investment, which in turn had a 45 per cent indirect interest in Sabana Reit's manager. She sold a 35 per cent stake to ESR in 2018 and the rest in August 2019.

The Business Times understands that Ms Ng's 40 per cent shareholding came after she exercised her right of first refusal (ROFR) to buy over fellow shareholder Bobby Tay's 30 per cent stake when he had attempted to sell it to then-sponsor Vibrant Group.

Mr Tay was chief strategy officer and head of investor relations of the Reit manager at the time.

The other two Blackwood shareholders - former CEO Kevin Xayaraj and former chief operating officer and head of asset management Aw Wei Been - had declined to exercise their ROFR. They later sold their stakes of 30 per cent each to ESR.

ESR also bought Vibrant's 51 per cent stake in Sabana Reit's manager in May 2019, for S$20.5 million, and the remaining 4 per cent held by Atrium Asia Capital Partners for an undisclosed sum.

BT understands some owners of Sabana Reit's manager were happy to sell after unitholders had tried in 2017 to oust the Reit manager.

ESR, meanwhile, was paving the way for a new deal. It had in 2017 been in merger talks with the manager of Sabana Reit, but those fell through on valuation grounds.

According to last Sunday's disclosures, the consideration paid to Ms Ng for her stake was "in line with and marginally lower" than what Vibrant got.

Ms Ng rejoined Sabana Reit's board in August 2019, after quitting in early 2017 over "internal dynamics". In November last year, she was redesignated from non-independent director to independent.

That re-designation has drawn criticism.

When approached for comment, corporate governance watcher Mak Yuen Teen said Ms Ng's dealings with ESR raise questions about her independence, and suggested regulators scrutinise the matter.

BT understands that concerns over Ms Ng's dealings with ESR were raised to regulators but that no credible evidence was found showing concert party action.

Regulatory action has thus focused on disclosures.

The Securities Industry Council (SIC) asked for clarification from Sabana Reit board's on its assessment of Ms Ng's independence in relation to a recommendation for the Sabana-ESR merger.

Approached for comment, SIC said: "We do not have evidence before us that gives us a basis to disagree with the board's assessment."

It added that if a director faces a conflict, he or she would not be able to make a recommendation but that the merger could still proceed.

The Monetary Authority of Singapore echoed this in its response to BT's queries, and added that it had required Sabana Reit's manager to issue an addendum to its annual report. This disclosed the board's assessment of Ms Ng's independence and was filed on Sept 21.